Rohr: Time for a New Approach to Ethanol Mandates

After contending with a political firestorm, on Nov. 16 the EPA announced that it will not temporarily waive federal requirements for blending ethanol into America’s fuel supply. Corn farmers and many ethanol producers are happy because they want no change in the status quo. But critics of the ethanol requirements who wanted the requirements suspended include eight U.S. governors, 200 members of Congress, livestock producers, environmentalists and U.N. officials concerned with world hunger.

When such a broad coalition indicates that something is broken, it behooves policymakers to consider how to fix it. This recent furor should motivate Congress and the Obama administration to take a new approach to the ethanol mandates, which are codified in the renewable-fuel standard that was last modified in 2007.

Critics of the RFS rightly point out that because ethanol is produced almost exclusively from corn, food prices have spiked in the U.S. and abroad, and the environment has been degraded. But while some critics want Congress to reduce the amount of ethanol required for America’s fuel supply, this would make it more difficult to wean ourselves off foreign oil. Instead, policymakers should revise the RFS to promote new alternatives for ethanol production, using technologies that were unavailable in 2007.

Adding more ethanol to our fuel supply is a great idea, but relying so heavily on corn-based ethanol is not. Mandates in the RFS have forced about 40 percent of the U.S. corn crop to be used for fuel this year, even in the midst of a record-breaking U.S. drought. World Bank researchers — among many others — have blamed the depletion of corn from our food supply for soaring global food and feed costs. According to an American Farm Bureau Federation survey, the average cost of a Thanksgiving dinner this year was about 35 percent higher than it was in 2005, when the RFS was first passed. The U.S. government should be doing everything possible right now to curb food prices, rather than ignoring the problems inherent in corn-based ethanol.

The RFS encourages other sources of ethanol, mandating a gradual increase in its production from non-corn sources such as grass, tree bark and municipal waste — “cellulosic” ethanol. But these advanced biofuels have shown little promise. As a result, the EPA has had to revise the requirement for cellulosic EVERY year to something well short of the 500 million gallons that was originally mandated for ethanol production in 2012. Clearly, cellulosic will not be commercially viable to meet even minimal short-term RFS requirements. Over the long term, Congress has mandated that 36 billion gallons of ethanol be produced by 2022, and that 21 billion gallons come from non-corn sources. Relying on cellulosic technology to reach this ambitious goal is just wishful thinking, not sound policy.